Market Brief: US-China Trade Talk Snag Overshadows Powell’s Testimony


View our guide on how to interpret the FX Dashboard.

  • In his semiannual Humphrey-Hawkins testimony to Congress, Fed Chairman Powell did not tread any new ground, reiterating his view that monetary policy is appropriate and the US economy is doing well.
  • Separately, the first phase of public hearings around President Trump’s impeachment began. Prediction markets are pricing in about a 75% chance that the president will be impeached (though not necessarily removed from office), but the market impact so far has been limited.
  • Reports from Dow Jones indicate that US-China trade talks have hit a “snag” over the exact amount of agricultural purchases, leading to a midday swoon in risk appetite.
  • FX: The New Zealand dollar remained the strongest major currency on the day after the RBNZ surprised traders by refusing to cut interest rates in the Asian session. The loonie was the weakest major currency, despite today’s rise in correlated oil prices.
  • US data: US CPI came in stronger than expected at +0.4% m/m vs. +0.3% eyed, though the more important Core CPI reading merely met expectations at +0.2% m/m.  
  • Commodities: Gold and oil both rose nearly 1% on the day, with the latter benefitting from the EIA’s decision to cut global oil demand forecasts by 90k bpd.
 
  • US indices closed generally in positive territory after shrugging off the midday trade talk snag.
  • Utilities (XLU) were the strongest sector today, gaining nearly 2%, while Financials (XLF) were the weakest.
  • Stocks on the move:
    • 2019 standout stock Advanced Micro Devices (AMD) gained another 2% after announcing that Chinese giant Tencent would use its chips in servers.
    • Walt Disney (DIS) surged 7% after announcing that its newly-launched Disney+ streaming service has already surpassed 10M subscribers.
    • Marijuana company Tilray (TLRY) slipped -3% after reporting a -$0.50 loss per share, though the firm did beat revenue expectations. Two more major marijuana firms report earnings on Thursday – see our preview here.

Disclaimer: The information on this web site is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement. The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.

Futures, Options on Futures, Foreign Exchange and other leveraged products involves significant risk of loss and is not suitable for all investors. Losses can exceed your deposits. Increasing leverage increases risk. Spot Gold and Silver contracts are not subject to regulation under the U.S. Commodity Exchange Act. Contracts for Difference (CFDs) are not available for US residents. Before deciding to trade forex and commodity futures, you should carefully consider your financial objectives, level of experience and risk appetite. Any opinions, news, research, analyses, prices or other information contained herein is intended as general information about the subject matter covered and is provided with the understanding that we do not provide any investment, legal, or tax advice. You should consult with appropriate counsel or other advisors on all investment, legal, or tax matters. References to Forex.com or GAIN Capital refer to GAIN Capital Holdings Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.

The markets are moving. Stop missing out.

OPEN AN ACCOUNT